given the significance of the resolution under consideration today, i want to thank chairman walton for respecting the request of ranking member of the full committee mr. waxman, myself, and members of the subcommittee, to have a legislative hearing. i think it is essential that members of the subcommittee have an opportunity to hear from key stakeholders who are here today before voting on a resolution that turn overturn the fcc internet rules. it is interesting to listen to the statement that members make. this is all about an open and free internet. in fact, those words are really the hallmark of the internet. all of the reasons that my republican colleagues are saying they are doing this is fascinating. the stake holders themselves are on the other side of the issue.

they do not believe that the light touch of the fcc is menacing. in fact, they have said and waited and we know the testimony. you have seen it, not only the testimony, but the letters that have poured into this committee, of groups and organizations across the country, from religious leaders to consumer organizations to high-technology associations. they have always been and said do not do this. it is fascinating to me, but they say they are for an open internet after reviewing the record of where there have been abuses. we want to see consumers making the choice, not corporations. we want companies to grow and be successful. there is a long list of them, so many of them are constituent

companies from my congressional district. i think that everyone here really needs to think very carefully about the direct and indirect consequences of passing this resolution. disapproving the fcc rules is a serious threat to our economy and i think it is a direct attack on transparency. it could also lead to further uncertainty in areas beyond the december order, such as their ability to promote public safety and insure online safeguards that prevent piracy and protect children from accessing harmful internet content. as i alluded to a moment ago, the history of an open internet speaks for itself. businesses that rely on an open internet continues to grow. unopened internet continues to grow. a stunning example is ebay. in just over 15 years, it has gone from a living room started to a company that enables hundreds of thousands of

americans and small businesses and entrepreneurs to sell their goods to consumers across the country and around the world. the significance to our economy is enormous. it is actually stunning. $60 billion in goods sold on ebay marketplace is globally in 2009 -- a similar story of success is netflix. in the last year, it has added 8 million new subscribers. with over two thousand employees and a physical presence in every state, netflix is continuing to grow. there is a reason for it. open, accessible, consumers making the choice. that is what we seek to protect. so why are the basic rules of the road essential to the continued growth of these companies? by preventing blocking and unreasonable discrimination, the internet can remain a source

of innovation and new ideas. not a platform for consumers and businesses where they are told what sources of news, information, and entertainment they can access. the witnesses that are here today, we're all grateful to them. i want to express a very special thank you to robin chase who flew from paris, france to be here today, only to fly back to berlin, germany this afternoon. that is one hell of a commitment, to come here and to speak on this really extraordinarily important issue. we are very grateful to her. i think that this is just one example among thousands of internet innovators who understand how the cra will hinder job creation and consumer

choice. i am also pleased that members will be presented with the economics theory supporting the fcc rules. mr. chairman, thank you for making sure that we have this legislative hearing. i think the witnesses and i do not have any time to yield back. >> that is all right. i thank you for your comments. we look for to hearing from the witnesses. the prime minister of australia will be speaking to a joint session of congress. at some point, we will recess. we're not allowed under our rules to meet during a joint session. i would like to point out how much we appreciate you being here. you had to fly from france and back to germany. we could have used high- technology, maybe, to get your testimony and take your questions. we could have worked on that. i would also like to point out for the record that this is our second hearing on this topic. we had all the fcc commissioners before. if it is equally divided among the democrats and the

republicans. at the conclusion of this hearing, there will have been two hearings. probably one of the first times in history of the committee, the minority has more witnesses on the topic and the majority. we're trying to hear from people. we're trying to be fair and balanced about this. we look for it your testimony when we resume. so i recessed the committee until after the prime minister. it is probably about an hour by the time members go and get back. it may be a little more. we can hang out, but not too far away. with that, the committee stands in recess. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

b>> thank you for being here. i believe we will just go left to right. we appreciate your willing to come in and testify. if you want to go ahead and start, we welcome you here. >> good afternoon. as a coordinator representing more than 800 groups, i appreciate the opportunity in today's hearing. let me acknowledge and often

forgotten truth. the principle of non contamination was not always the political football it is today. the debate has been coming it was the nixon administration that the templates strong gross the strong discrimination. this was later approved upon. a bipartisan congress recognized that we needed the sec to ensure that everyone had open access. look no further than section 10

the sec began to abandon the blueprint. they recognize the underlying outcome. kevin martin took action in 2008. recently, we have seen this debate moved away from the goal of preserving the open internet. the problem is real and inconvenient. we have seen the cease to recognize this problem abandon its. some say it is perfectly competitive.

we all agree the internet should be preserved. public policy should be used to prevent it. we have a duty to confront the reality. my organization old money opposed it. fell and failed to protect the internet. this is a dangerous overreaction to a framework that is very

similar to the bipartisan and 2006. adoption will increase market uncertainty and harm economic growth. most have told wall street the truth. these rules are no burden. the resolution is a solution in search of a problem. innovators believe they have a -- an important framework. it will remove the certainty. there may be much to dislike. when can not set up a false choice between policy and none at all. we cannot wish away the market structure. i am a strong believer in free

markets. i understand the barriers that have a natural monopoly characteristic. they cannot afford for congress to remove what little oversight is left. we urge the body to remember the commitment to protect nondiscrimination. thank you for your attention. >> we appreciate your testimony. >> to welcome you to the said committee. please, go ahead. >> thank you for this opportunity to discuss the importance of network neutrality rules. i am the founder of a bride sharing community, a consulting firm that advises governments, and the founder of the world's largest car sharing company.

when i receive the -- i was working crossed the atlantic. despite the resources, i accepted the invitation. the course of action, repealing the sec, will really hurt. i care deeply about maintaining our leadership in the world marketplace. 11 years ago, i co-founded zi pcar. it is only because of the east, a speed in 0 marginal cost of preserving a car that anyone would be willing to wented for an hour or sell in ours card time. it would simply not exist without the internet.

neutrality roles of elimination will put it as a significant disadvantage. it prevents the telecommunication industry to destroy mdiscriminate. imagine if they are forced to rely on the partnership or had to ask permission to exist. it would have been seen as implausible and threatening. we cannot rely on the telecommunications industry to define the internet. these companies will define the internet for their triple play. they will seek to squash any service that their and their revenue stream. this is not just speculation. it is personal experience. during the initial years, the

wireless and she was unable to think of outside the box. when we approach cell phone companies, we were met with unresponsive stairs. they have only one procession of wireless at the time. many representatives that the nurse in the difference between purchasing kilobytes verses of producing minutes. in their minds, their customers all used sell phones. the internet is a circulatory system. it is applying new ways of thinking to problems. the open internet allows for extraordinary low input cost which allows you to the tax into capacity. i agree that excessive

revelation stifles creativity. the most important thing and the reason i am here, the protections enacted by the sec will help ensure an open internet. now our neutrality -- -- network bit tardy promotes innovation. i think the rules do not go far enough, especially with respect to the wire list. my experience of the internet would be different whether i was sitting at are in a park bench. dramatically affects the life of innovators. if congress wants to unlock

economic potential, it to do so by improving the role in this regard. 20 years ago, no one would think that they would -- the internet would use large amounts to look to share cars. it is critical that it is protected from companies that want to control how of engineers use the network. it prevents it from controlling how entrepreneurs use the internet. thank you for letting me testify. >> thank you for being here.

>> he welcomes your testimony. >> it is unusual to be asked to testify. we have been involved for years. we support an open internet. like many issues, this debate did fall into a long discussion of specifics. and what legal authority they have to put it in place.

as in most regulatory debate, many saw a heavy-handed regulation. others are advancing their own ideologies. at&t is a post of the regulation of insurance services. this is still our strong preference. the markets are more than adequate to eliminate abuses. this continued over the years. there is nothing so powerful as one whose time has come. it was truly bad. in october 2009, some of them found their way into the net and neutrality rule.

they strongly oppose this proposal. it is a very bad climate for investment. it in the spring of 2010, it went from bad to worse. the commission acted by proposing to subject all facilities under the act. we fought it vigorously. this except -- but said the financial markets. he began seeking a different approach. at&t participated.

we thought the issue was on a dangerous path that could end badly. it does, contentious. it led to discussions. most the thyssen's -- participants felt to be fair. they made clear the intentions to move forward. in the situation, it is either a bad or worse. with others in the industry, we decided will be able to accept the rule. we were on rolling been unwilling to support anything that went beyond that. they were under pressure from others to impose title to

regulations. this is not a perfect solution. i preferences they should not regulate in the internet space. they are pressing for more extreme regulation. they acted in good faith to find that middle ground. it is consistent with the open policy.

it provides a path for continued investment by removing much of the uncertainty. it to as a factor with changes. we believe the results is both fair and so help maintain our companies' ability to invest. thank you. we are going to go with strategic choices. we appreciate your ability to come and testify. >> please, pull the microphone close. make sure it is turned on. >> good afternoon. thank you for the opportunity.

i have spent 25 years covering the communications industry before requiring -- retiring. wwhile i inted to work as a consultant, i represent myself. the internet has become central to the lives of most americans. it is something i rely on almost every day for communications. i agree with the stated goals of the order. the desire for an open internet, transparency, and environment that it surged to the benefit of both consumers and providers. i am concerned that some aspects will result in an unintended but detrimental consequences to investment and innovation.

it is important to emphasize that the debate is not about whether blocking our degradation of service is good or bad. it is about whether they are more likely to occur to the intentional actions of broadband internet access providers or the lack of investment. the order appears to be on the view of the echoes system that assumes that it is nature and static. providers are left free to transform their business plans at will. it is provided to them free over the networks. the order restrict the carriers flexibility.

it limits their sources of revenue. it forces them to subsidize this year and the customer base. a transfer of wealth can be beneficial. a transfer of wealth what all similarly cripple the party. it is the orders assumption that it is possible to protect this at the expense of the corps. they are intertwined to protect the edge. far more devastating to global and netflix pending charge for

transport is an evolution in capacity for lack of investment. it can only follow a step behind. they have an unending need for capital. they must be upgraded to satisfy the need for speed, quality and security. if only raise capital to invest. companies need flexibility. they need the ability to adjust their plans. they need to have the flexibility in doing so.

as an example, the model is at the wholesale level. the price of that access will increase. investment will fall. that is damaging not only to the carrier, but it is damaging to the providers the ride on the networks and are constrained by the capacity of quality limitations. my concern is the there is a false duality.

it can only exist if the core prospers. bad >> thank you for your testimony. we appreciate it. next is a professor at the kellogg school of management. we welcome me. >> thank you for giving me an opportunity. i come as a professional economist.

from the standpoint of the economics, there are risks from the internet order. the order books like good economic policy. if we want to treat a prosperous one, think about how well it works. think about all the ways it could have gone wrong. how do you do that? he keep costs low. it avoids a number of practices that would have raised transaction costs. today any of entrepreneurs do not worry about the gateway firm.

with that and by problems? they suggest there is a chance it will not. regulatory restraints prevented carriers from taking certain actions. there is little experience on how they would be paid. one concern rises due to commercial activities. it cares act on their instances, we would expect them to help all of their businesses. it also heightens the incentives. there are other factors pushing in that direction. it generates transparency.

it reduces incentives to block traffic. people can differ that is what forecasting is hard to make. it would be costly. the introduced hassles and delays. even genius at harvard have ideas to up seed mark decker birth. continuity is a regime of continued presence with occasional action. it is my view is that the policy represents continuity.

it does not change much of what they do. it lets them innovate and start businesses. it raises the certainty that it does not emerge in the near term. the gains are high. thank you for your attention. >> we appreciate your testimony. we welcome me. thank you for being here. >> thank you for the opportunity to testify. it is a great honor to be here i

started reselling dsl. i've said on advisory boards. it is made up of small independent companies. the combined services cover more than 75% of the entire population.

he can reach areas that are unlikely to cover. and here to show my industry support. and despite believe that they have overstepped their authority to address the problem that cannot exist. it'll destroyed judds. beerules and regulations create jobs. it presents access to all americans. a lease to lifelong careers.

we do not need band-aids. we need to competitive environment. the consequences will be open. net neutrality regulations is from the monopoly. it is unnecessary if we build competitive industries. providers need the support. uncertainty and liability created will be so great that even i have to reconsider whether to continue to investing money in my company. we expect first-generation providers to allow the second- generation applications. they may see the capability are

simple use policies. it is inappropriate to insist that they need to support a user application. i believe it this far led to guarantee that they matched the actions. the rule is intended for the providers. they have the same technical strengths. one size does not fit all. i wish i can say the internet is simple. it is not. it is different in every community that its employees. i see no ways it could never keep up. it addresses what could happen

read them what did happen. content providers have demonstrated actual anti- competitive behavior. it prevents everyone of them from accessing the contents unless the provider pace for every customer it has. this is anything but neutral. the rules failed to address the issue. they ought to address ones that actually exist. the rules unjustly title providers to free reign of someone's private network. they could rent and ip network

inoperable. -- render an ip network inoperable. many areas are served by only one there to providers. the rules themselves make the problem worse by making it more difficult for providers to expand their services. they deliver more capacity to the end user. there are 34 megabits. the network is really engineered.

wireless users get up to 400. >> you have exhausted your time. can you wrap it up? >> they are inappropriate. we want the flexibility to compete. >> thank you. >> thank you.

>> we are on time restraints. we each get about five minutes been >> de believe they are on strong legal grounds with this order? >> i believe they take an unnecessary risk by going down. >> you do not believe they are on strong legal ground? >> i believe they are less than they could have been. >> do you oppose it -- because you think they might lose in court when it have been stuck? >> they will be forbidden from enacting similar rules. it could extend far beyond network neutrality. >> the real issue is that they cannot do title numbers 2.

>> i do not believe. i believe it is separate. i do not believe it'll fall under the cra. >> it says they are grounding these new rules. they were rejected by the courts less spring. it presents an unnecessary risk. such a move does not justify -- in places the entire broadband agenda in jeopardy. >> that is exactly right. >> a vote against is a vote for reclassification. more than three and the members have opposed. is it york -- 300 members have opposed. is it your sense of this is something they could live with because it was better than tie till -- than title 2

reclassification? >> that is correct. the more competitive providers have the price. i agree. >> all of us could probably live with the rules if we had to. they do not necessarily stay there. the rules and not give all the protections they need. >> doesn't give you any concern that they refuse to close the title? >> they are taking information. >> this is an issue that needs to be solved by congress. congress should stop that if it happens.

>> i would consider. some of us believe they do not have the authority. it has not been granted by this congress. you explained that networks have a voracious and unending need for capital. will the net neutrality order hurt the market for network providers? >> yes. it appears lightly. it is going to make it easier. it is driving of the cost of broadband. i think it is planned to be a

problem. >> per capita. >> thank you for coming. i would suggest that she does have to be some time this afternoon to catch a flight back. you may have to depart. despite the fact that these rules have never existed previously and the companies have tried, do i understand that you support these rules because you believe they are needed for companies to compete on the internet? >> they have not existed. it is not have a very long life. the power is becoming more obvious. i think it does need protection. he said small companies will get squeezed out.

>> it is classifying what constitutes the internet. we tried to protect them from duopolies. it means some oversight. >> his googled charge web sites? >> the ruling does not deal with a giggle at this moment. it is more talking about infrastructure. >> are you concerned about that? i could become worried about that. in preparation, i did them little search.

isn't this the issue you are concerned about? >> i would say the exact opposite. if we think about the old day and newspapers, i can buy a giant full-page ad. small companies could never afford it. this is a parallel i like to draw. >> this is an instructive hearing. thank you for traveling the distance you have. but you are an american entrepreneur and businesswoman. you are an innovator.

i do not know my colleagues know this, but this was named by "time" as one of the most ever to win two people. you bring a lot to it -- most influential people. to bring a lot to the table. there is a different at the table. you heard what he said. while i am not going to -- i a pair facingbe carryin -- the rolls -- paraphrasing -- it would hit that and damaged capital. comment on that?ic would you go to the heart of this whole capital formation and businesses thriving or not the right thing?

whether the rules are helpful are hurtful -- or hurtful and this attempt -- i think there is a virus here in congress. it is not about net neutrality. it is not any kind of regulation and whether government agencies have the authority to carry out rules for their regulations. that is what is at the heart of this thing. >> when we think about whether we are protecting the court, the core is a duopoly. they have no competitive reason to make good investment choices. we can invest in something or cut our costs. there has been an argument that there is only one thing for them to do. i do not buy the argument that

because they are cutting off 1 revenue source that the whole thing crumples. it does not make sense. >> i disagree strongly with the assertion that all the i p have a problem covering the cost of data. there are different costs and a large variety. 15% lives in low areas. in the urban populations, we had a complete bill del. -- build out. they get margins somewhere between 70% and 90%. something like 70 cents on the dollar goes back to capital investment or the stockholders. the rest of it covers the cost of their data, because the cover

for a customer maintenance. -- covers the cost of their data, the cost of customer maintenance. there is not a crisis in 85% of the population over how much data a can handle. >> i'm going to ask you to stop. >> i mentioned about innovative companies, netflix and ebay and how they have flourished. thousands of jobs have been created. in the written testimony, he suggested an appropriate price might be to block netflix altogether. i find that a little chilling.

>> will you turn on your microphone? >> to block anyone i think is at the heart of all of this. why we do suggest that inappropriate management is to block? why do you find that to be appropriate? >> it is appropriate because you block the source of the problem. you block netflix. i think this is an an eloquent statement about a school of thought. i do not agree with it. i think it would be offensive to consumers across the country.

that is my view. you have yours. >> thank you. >> do you have a response to those issues? lepage schweikert, -- microphone, please. it is still not on. >> i would like to correct a fact. if you look at the margins of the carriers, the net income margin is 10% for at&t and verizon and 6% for frontier. i am afraid the numbers are reversed. to go back to the issue of revenues, is that not only are

the company's not being allowed to charge for whole cell carriers, the revenues that will get lost are the revenues to come away. it is supported by the core revenue. >> so when to give you that opportunity. >> there was a statement made during the opening that this is necessary.

companies have hindered or blocks or interfered with the vibrancy of the internet and ingenuity. can you tell me what policies exists with at&t and what you can share or blocks? >> i do not believe anybody can point to a single instance where at&t has done anything of that nature. probably no company has made available to consumers more choices over the past five years and at&t. >> what about locking? >> that is a major issue.

how have you blocked access? >> we have not. >> you have not? >> no. you have come so far. i want to make sure we use your time. he mentions there was an issue with wireless. can you tell us -- there were problems with ifps or backbone or any part that hindered the ability of that company. >> the antidote i gave about starting in 2000, there is a lot of talk about wireless. we were the second application for consumers out of cell phones. i was struck then that the telecommunications industry was lagging behind innovation. they were the gatekeeper's on

how to buy data packet. >> did they work with you? >> no. we had to do a work around for the first three years. it was hard to wis. -- are u.s. -- a it was very arduous. they give the profession to manipulated as they saw fit. there is a significant delay. it is the dividends and not us permission. >> would you like to reply? >> she did say that was for rising and not at&t. is that a net neutrality issue? >> microphone, please. >> i think companies are free to price their companies. how they choose to price them

may help some companies and hurt others. that is within their purview. none of the things cited with net neutrality violations. >> my time is up. i know you have been under to repudiate. at&t was the preferred no role. it is my understanding that you think they landed on the reasonable middle ground.

it removes the uncertainty. is that an accurate description? >> it is. it provided them and they interpret this role. they stated that they supported it.

of the underlying legislation. h.r. 836 repeals the emergency mortgage relf program and rescinds and permanently cancels all unobligated funds.

it directs the secretary of housing and urban development to conduct a study to determine the extent of passage of the usage -- of the passage of the emergency mortgage relief program. by covered homeowners, which includes members of the armed services, veterans, and gold star recipients. and lastly, it requires the secretary to submit a report to congress including the results of that study in identifying any best practices that could be applied to the emergency mortgage relief program for covered homeowners. . the dodd-frank act established a $12 billion housing and urban development -- $1 billion housing and urban development emergency home opener relief program which provides loans or credit advances to unemployed borrowers who cannot pay their mortgage to make mortgage payments for a period of 12 months with a possible

extension. these loans increase the amount of the homeowners in--' indebtedness or the borrowers' indebtedness so a borrow who who is unable to pay back either the original amount of principle or the additional loans made under the program would quite probably be worse off in the long run. these borrowers derived no benefit from the program and the government will suffer the losses from their ent defaults. that's the way -- eventual defaults. that's the way the program was set up by the democrat majority. continued government intervention and questionable use of taxpayer dollars only prolongs our current economic crisis and ensures that the housing market will continue to struggle. the market needs to find its own footing free of government intervention and manipulation so that we can get on with a full

recovery. the deficit is expected to reach a record $1,650,000,000,000 this year whilthe national debt is well over $14 trillion and growing rapidly. as a matter of fact growing so rapidly that last month $230-plus billion as a deficit for one month, the largest in the history of this nation, was recorded. yet at do we heaout of the white house? spend, spend, spend. including against this bill that they have offered to veto because it would save some money. the u.s. simply cannot afford to loan billions of taxpayer dollars that will not be repaid. the obama administration in its f.y. 2012 budget proposal estimates that this program will

have almost 98% subsidy rate. that means that for every dollar the government is expected up front to lose, 98 -- to lose 98 cents. on every dollar of this program the government right up front is expected to lose 98 cents. mr. speaker, no wonder, no wonder republicans are trying to go back and look at the programs. the massive spending ograms not only by president obama and former speaker nancy pelosi but also the committee chairman and those who brought these measures to the floor that have had a stunning impact on the economy of this country. also, h.u.d. regulations set up a process where the bridge loan can be forgiven over a five-year period. this is irresponsible.

it is irresponble not only now, it was irresponsible at the time it was passed by this house, passed by the senate and signed by the president. this is not a loan program but another government welfare program. job creation is the most effective foreclosure prevention tool. job losses rather than unsustainable mortgage terms are now the driving force behind foreclosures and mortgage defaults. the government does not need to be adding additional debt obligations onto borrowers who are already struggling with their current commitments. particularly when doing so adds to the debt burden of every single american. including those who took out these loans who have to suffer through the process as they are seeing themselves use of a government program that provides not only more debt to the

country but tremendous strain on themselves. government was not there to help , they were there to indebt the american people. congress should focus on job creation not welfare and giveaway programs. this is the best way to prevent more foreclosures and to get our economy back on track. the congressional budget office estimates that enacting h.r. 836 would decrease federal budget deficits by $840 million over the 2011 to 2021 period. my colleagues on both sides of the aisle understand the current dire emergency that we're facing with the state of the u.s. economy. and that american families are struggling. why should the government go and make matters worse?

it is our job as members of congress and as legislators to ensure that the policy which is passed by this house has integrity and can be backed up by the full measure of the free enterprise system instead of a government backstop and it is that government backstop that republicans obserd to then and object -- objected to then and object to now. we need to make sure that our greast days e in our future, not the government handing out checks because the government didn't mind the blank check that it originally satisfied itself for in this legislation. we should be creating opportunities. we should not be holding back americans from earning not only the opportunity for potential in their future b also for making their life better. eliminating this program will save taxpayers lots of money and

encourage more responsible government spending by the federal government. mr. speaker, this was an unwise program, it proved in that way and today republicans are on the floor of the house of representatives to say, we can do the right thinged to -- today. so i encourage a yes vote on the rule and a yes vote on the underlying legislation and i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentlelady from new york is recognized. ms. slaughter: thank you, mr. speaker, and i thank my friend and colleague for yielding this time to me. and i yield myself such time as i may consume. the speaker pro tempore: the gentlelady is recognized. ms. slaughter: i certainly want to agree with my colleague, mr. sessions, that what the world is waiting for is congress to do, to create jobs, we're approaching 100 days here without a single bill to do that. and certainly look forward to that great day. mr. speaker, it was not that long ago thathis country was facing the real possibility of another great depression. the financial crisis of 2008 was caused by reckless decision making on wall street that had deep and painful impacts on

hardworking americans everywhere. as a result millions of people lost erg everything. they lost jobs -- lost everything. they lost jobs, retirement savings and homes. all across america families anguished over how to feed their families, how to keep them in fact, how to keep their lives together for just one more day. three years later we're starting to see the signs of fragile revery. however slowly we have started to see modest private sector job growth over the past few months. however, we are far from where we need to be in the troubled housing market remains in -- and the troubled housing market remains in complete disarray. millions of americans are unemployed, still struggling to keep up with their mortgage payments. millions more are saddled with mortgages worth more than their homes. foreclosures swallowed up a whopping -- whooping 1.2 million homes across the country in

2010, also 900,000 in 2009 and despite the republicans' apparent lack of concern for the ongoing foreclosure mess, many estimate the united states will eclipse previous yearly totals and foreclose on even more americans in 2011. there is overwhelming evidence that everybody knows about that many of these foreclosures were faulty or downright illegal and yet no accounting of this failure is demanded. but the people who lost their homes have lost it in major ways and have no recourse except some of these bills. these bills obviously need a lot of help. i couldn't agree more. they're not the best we could do . and yet the sad thing to me is that once these four bills are done away with, there is no replacement. and we simply leave americans to function as best they can.

if we're a nation that cares whether or not our neighbors are kicked out on the street, it's clear that we can't end these programs designed to lend a helping hand without something to replace them. the emergency homeowners loan program was created to help prevent foe foreclosures that are a result of massive financial hardships caused by unemployment and underemployment across the nation. admittedly some foreclosure prevention efforts in the past few years have not had as much tract as we hoped. and we've certainly had very low cooperation from banks. they were simply asked to help, not required to. democrats agree that the programs need improvement and support a process to allow for bipartisan collaboration. so it's a shame that we stand here today ready to kill this program before it even gets off the ground or has a chance to help stem the tide of foreclosure. my colleagues on the other side are ready to end the program without offering any solution to what is clearly a continuing

problem. but if we don't provide our constituents in need, provide them help, then who? it surely won't be the big banks. foreclosing on our neighbors at record numbers. just today "the new york times" reports that the c.e.o. of bank of america rejected the idea of reducing home loans for americans in need. he thinks that if he has to do it for one he'll have to do it for all. what's fair about big banks reporting record profits by kick homeowners out on the street? what's fair about banking executives walking away from the iled mortgage schemes without punishment while thousands live in their cars? the audacity to call for fair modification process after swindling of millions of americans with predatory mortgages and walk away with record profits is simply maddening. yet we stand here today preparing to debate a bill which all -- which will tell american

ople that we just don't care with so many homeowners still facing foreclosure, we should be focused on ways to improve programs designed to keep people in their homes. many of these families are facing insurmountable odds on their own but with just a little bit of help they may be able to make it through this tough time. but instead of reforming the program today we are eliminating it. i would like to talk a little about the process. today's rule is not an open process. for starters it's a debate on the bill,n amendment cannot be offered because it was not even printed in time. secondly, if the bill is changed by an amendment, members will not have the ability to respond to change it. this give and take of ideas that is the hallmark of dynamic and regular roadways -- rig louis he -- rigorous debate. the biggest problem with this process is that members who want to reform the program rather than completely get rid of it must find a germane offset which is nearly impossible because the bill completely eliminates the

program. in order, any amendment to save any part of it would have to be offset by new ney. we agree that reform is needed, members have ideas for reform, alternatives to simply eliminating existing programs. unfortately under this process these alternatives cannot be offered. i urge my colleaguesen to the other side to work with us -- colleagues on the other side to work with us to improve these foreclosure programs, stem the foreclosure tide and strengthen our middle class. this bill does not do that and i urge my colleagues to vote no on today's rule and reserve the balance of my time. the speaker pro tempore: the gentlelady reserves the balance of her time. the gentleman from texas. mr. sessions: thank you, mr. eaker. by the way, we are working with all the members of congress and that's why we went through regular order which was a new process for this house from the last four years. we also came to the rules committee and allowed an open process and any member that

chose to have an amendment be offered today simply had to go and tell us ahead of time that they would like a preprinting notice and they could get that done. that is working together with every single member of congress. mr. speaker, at this time i'd like to yield for such time as she may consume to the chairwoman of the housing committee, of the financial services committee, the gentlewoman, mrs. biggert. the speaker pro tempore: the gentlelady from illinois voiced. mrs. biggert: thank the gentleman for yielding. mr. speaker, i rise in support of this rule, house resolution 151, and house resolution 150, the rule for h.r. 830. last week the committee on financial services considered an and approved two bills. h.r. 836, the emergency mortgage relief program termination act, and h.r. 830, the f.h.a. refinance pgram termination act. h.r. 836 would terminate the emergency mortgage relief program and rescind any unobligated balances remaining under the program.

the emergency mortgage relief program created by the dodd-frank act establishes a $1 billion fund to provide loans or credited answers to borrowsers who can can't pay their mortgages because of unemployment or reduction in income. to date no funds have been provided to meowners under this program and serious questions remained about its cost, effectiveness and benefits. the c.b.o. estimates the program will have a 98% subsidy rate meaning that for every dollar loaned thunderstorm program, 98 cents -- under this program, 98 cents is not expected to be repaid. gibbon the country's current fiscal situation -- given the country's current fiscal situation, no program warrants funding when benefits are speculative at best and substantial taxpayer losses are certain. . the other bill approved, h.r. 830, which will be addressed by the rule, h.r. 830, the f.h.a.

refinance program termination act, would rescind all unobligated balances made available for use under this program. more than $8 billion in tarp funds has been setaside with f.h.a. refinance program, and $50 million has been disdis bersed since september, 2010. the extraordinary investment of their money, the taxpayers have thus far gotten very little return. the administration originally estimated this program would help between 500,000 and 1.5 million homeowners. however only 44 loans have been refinanced and only 245 applications have been submitted. this program has been plagued by problems from the start. borrowers are frustrated that few lenders participate in the program and it's difficult for borrowers to even find out if thr mortgage servicer has agreed to participate. rather than continue to spend

money we do not have on programs that do not work. congress should focus on creating the certainty, job creators need for economic activity and highering. this means we must root out wasteful government spending on ineffective programs such as the f.h.a.efinance program. what the american people want are jobs. not a handout or a program that doesn't work or is ineffective. i urge my colleagues to support the rules for h.r. 836 and h.r. 830 and yield back the balance of my time. the speaker pro tempore: the gentlelady yields back of the the gentleman reserves the balance of his time. the gentlelady from new york. ms. slaughter: i am pleased to yield three minutes to the gentleman from new jersey, mr. andrews. the spker pro tempore: the gentleman from new jersey is recognized for three minutes. mr. andrews: i ask unanimous consent to revise and extend my remarks. the speaker pro tempore: without objection. mr. andrews: thank you, mr. speaker. i thank my friend for yielding. i want to agree with, mr. speaker, with the gentlelady

from illinois, who just spoke who said what the american people want is jobs. i agree with her. and when we assess t record of the new majority on this issue, i think we have to assess it's found very wanting. this is the 10th week of the new majority. in 10 weeks very found a way to shut down women's health clinics by defunding planned parenthood. they found a way to essentially repeal 30 years' worth of protections for our drinking water and our air and our land. they found a way to pass a budget that cuts education, that saps strength and energy from our job creators in this country, but they haven't found one bill, onminute, one debate over a plan to work together to create jobs for the american people. i believe,r. speaker, that the erican peoe want republicans and democrats to come together and figure out and environment

that will encourage entrepreneurs and small businesses to create jobs for our country. the majority has done everytng but that. and today is yet another bill that i think is a wasted opportunity in that regard. i view this --today's debate through the eyes of three constituents i interacted with at home this weekend. one was a gentleman who runs a music distribution company. they produce c.d.'s for people who have written and recorded music and don't have a label yet so they can get the music out there. he employs 500 people and he wants to grow. and in order to grow he needs people who are fassel with various -- facile with various softwa. he depends on graduates from our community colleges and four-year colleges and universities, and he didn't understand why the majority wants to cut the -- the maximum college scholarship under pell grants by $845.

thereby taking employees away, conceivably from him, by taking them out of school. it's the home builder i met who can't call himself a home builder anymore because he's not building homes. and he wonders what we ardoing to try to restore faith and confidence to the real estate market so that americans will feel secure and confident enough to buy a home and put him and his workers back to work. he wonders what we are doing. the gentleman i met yesterday who runs a biotech company that has two employees. and he depends on contracts from the national institute of health to do research on various pharmaceutical products. he wants to double the size of his company, put just two more people to work, but he won't hire them as long as the threat of a government shut down is imminent. this is the wrong bill at the wrong time on the floor. what we shod be doing is coming together, republicans and

democrats, to cut spending -- i would ask for an additional minute. the speaker pro tempore: the gentleman is recognized. mr. andrews: i thank the gentlelady. to find ways to sensibly cut spending. many of us on the floor, for instance last -- two weeks ago, voted to not send $1.5 billion to iraq to fund their police department. many of us voted not to spend a substantial amount of money to the brazilian cotton institute. many of us voted to say if you make over a quarter of a million dollars a year as a farmer, you shouldn't get crop subsidy. these areareas that we agreed upon to reduce spending. let's work to sensibly reduce spending but let's not cut education and let's not undermine jobs. by all means let's bring to the floor a bill that says to my friend that runs the music production company, we will help train workers that you need. that says to my friend that wishes he were a home builder,

we'll talk to ese banks that have record amounts of money in their balance sheets and get them lending money again so people can buy a home. and says to our friend running the small biotech company, you don't have to worry, but there's going to be gaping cuts in the research budget of the national institute of health, we are going to fund them and they are going to continue to pay people to be the best and the brightest and find cures for diseases and you can hire those two more people. 10 weeks, no jobs bill. no jobs plan. no cooperation to produce an environment where small business and entrepreneurs can put america back to work. let's put aside our differences. let's get to work on solving the real problems of our country. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back. the gentlelady from new york reserves the balance of her time. the gentleman from texas. mr. sessions: thank you, mr. speaker. i'm shocked with our friend after friend on the democratic side who say, no jobs bill. no jobs bill. but my friends also recoize

what the american public does, that we voted literally the first vote in this house to overturn what is known as obamacare. the massive government takeover of health care in this country that would net lose 800,000 jobs. mr. speaker, the republican majority does have a jobs bill and that is to go and rescind what the democrats have outrageously done and that is to put this country in a diminished position not only with us being competitive overseas, but also for us diminishing american jobs. we are not going to do a jobs bill to add jobs. we are trying to simply go back and save the jobs that are being lost today and would be lost by wasteful government spending. huge government bureaucracies. so my friends on the other side simply want to come and attack us, while the republicans have

it and so do the american people. we are going to stop the outrageous spending. we are going to attack the rules and regulations which are killing not only business but losing jobs all across this country. we as republicans are going to stand up and say, $4 gasoline is outrageous, mr. president. work on the things from your administration that you are doing that ruin jobs, that make sure we have higher gas prices at the pump, and do those things that would help the american people. the republican house majoritys one half of of one third of the body, and we are one third of government. we are trying to do these things that the american people sent us here for. we are all about trying to reduce wasteful government

spending. we are going to take on the laws that have been passed by this president and the former two houses, congress -- sessions of congress that were outrageous spending, tax incrses, and assault on employers and making it more difficult for the american people to have freedom and diminishing our future. every time one of our democrat friends goes and says, there's no jobs bill by th republicans, the american people will get it. the republicans first have save t jobs that are at risk today. 800,000 net free enterprise system jobs that if we do not overturn obamacare that was passed by this body on march 22 a year ago, we are going to leeze even more jobs. the most immediate thing we are doing is trying to reduce wasteful government spending, to try and do away with and attack

rules and regulations that will kill the jobs that we have, and to make sure that we are telling the american peoplethat this spending spree that we are on that causes a massive deficit, a hemorrhaging by this government, including last month $230 billion we overspent, then we are doing our job. if we are doing those things, we are trying to save the jobs that we have got. mr. speaker, that is what the republican majority is about. we are not going to let the democrats get us off our game. we understand what they want. they want to talk about, well, we can look at doing back with some of the spending, but they -- when it comes down to it they can't pick anything they really will support. everything is a sacred cow. everything that we do is a problem if you go and touch it. mr. speaker, the republican

party, the republican majority led by speaker boehner and our majority leader, eric cantor, is all about trying to get back to america where we have a balance where we don't lose me jobs. where we don't add more debt. and we stand up for the american people. that's why we are the new majority party. i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of h time. the gentlelady from new york. ms. slaughter: to respond, i'm going to yield two minutes to the gentleman from new jersey, mr. andrews. the speaker pro tempore: the gentleman is recognized for two minutes. mr. andrews: i ask unanimous consent to revise and extend my remarks. the speaker pro tempore: without obction. mr. andrews: thank you, mr. speaker. i thank my friend for yielding. i have great respect and affection for my friend from texas. 's a valued member of this house and someone who cherishes this institution and represents his constituents well. i would like to respond to two of the points that he's made. first, he makes reference to this 800,000 job loss as a result of the health care act. there is a prediction made before the final version of the ack was put together -- act was

put together that predicted that 800,000 jobs would be lost. inact most economists have argued that hundreds of thousands of jobs would be gained, but more importantly, mr. speaker, than predictions, is reality. the health care law was signed into law almost a year ago. i wonder if any one on the majority side can tell us how many jobs the economy has lost in that year. i would be happy to yield. well, seeing no answer, the record -- happy to yield to my friend. how many jobs has the economy lost sincehe heal care bill was signed into law? mr. sessions: you asked if somebody who knew the answer would stand up. i don't know the answer. but i will tell you is that we will have the taxation start and

yet the plan kicks in in 2014, so massive taxation will start and then we'll find out what happens. mr. andrews: reclaiming my time. mr. sessions: we are still almost % unemployment rate. i don't see those -- mr. andrews: reclaiming my time. the speaker pro tempore: the gentleman from new jersey controls the time. mr. andrews: reclaiming my time. the answer is the economy has added over one million private sector jobs since the health care law was signed into effect. predictions of great job loss has turned out not to be the case. secondly, the gentleman made referencto the sort of great opposition to this law around the country. i frankly have not -- ms. slaughter: i yield another minute. the speaker pro tempore: the gentleman is recognized. mr. andrews: i thank my friend for yielding. the fact here is that despite this prediction of 800,000 jobs lost, in fact the economy has

gained more than a million private ctor jobs since this happened. i want to address one other thing he said. he said that our goal is to, quote, knock the republicans off their game. we do not think this is a game. we think 15 million unemployed people is a very serious national crisis and we do not want to play a game. we want to come to an agreement that would crea an environment for small businesses and entrepreneurs to create jobs for the amican people. . he mentioned sacred caos. we don't -- cows. we don't think college scholarships are wasteful spending. we don't think that student loans are reckless spending. we don't think that reading teachers and math coaches for our neediest children is wasteful spending. we don't think that job training grants for people who have lost their job is wasteful. we think that cutting those programs wastes jobs in the private sector. that's why we oppose the reckless budget plan, that's why we beseech the majority, let's get to work on putting americans

to work. i yield back. the speaker pro tempore: the gentlelady reserves the balance of her time. the gentleman from texas. mr. sessions: thank you very much, mr. speaker. you know, i stood up and openly said, i have no clue how many jobs have been added, but the million job figure that the gentleman quotes is not a net figure. it's not a net figure. we have lost many, many, many times what we have gained and the net figure means that when you add in what has been added versus what was lost this country's in trouble. and i think the american people understand this, they understood it last november, they understand it now. people are scared, they're scared about their future, they're scared about their job, they're scared about how much gasoline's going to go up, they're scared about whether the e.p.a. is going to come put some more rules and regulations on them, they're scared about what will happen in the long run, with their job and health care.

they see the diminishment of freedom, they see where we are in trouble, not only in our own homes, we're in trouble with our country. they see that we ran a $230 billion deficit last month alone. they see that this administration is incapable of looking at facts and factors and making a realistic choice about now that we understand what's happening, what are we going to do when we're in trouble. the republican party is here and we are not going to be knocked off our game, we are going to go and try and save as many jobs as we can from the onerous rules and regulation, the excessive taxation and perhaps worst of all the inattention to try and create a better ccumstance for this country. so, that's what we're going to do. we're going to go after it, we're going to repeal this obamacare, we're going to stay after the rules and regulations and we're going to make sure that the middle class in this

country has the chance to save the job that they have rather than diminishing it. you have seen, mr. speaker, all across this country the states who are in the most trouble have top to bottom democrat-controlled legislatures as well as democrat governors. those states are unwilling to make tough choices, they're unwilling to do the things which would say no to cotituencies who are special interests. today the republicans are on the floor of the house of representatives and we're saying not only no to special interests, but what we're trying to say is that we need to use common sense and balance. and i recognize 14 years ago when i came up here common sense is not common in washington. but today part that have common sense takes place with we're going to read the bills before we vote on them, we're going to go through regular order, we're going to relook at the things which have been passed which diinish jobs and which harm our

economy and those are the things whh we're on the floor to get done today. mr. speaker, i'm proud our republican majority, i'm proud of our speak who are is from the eat state of ohio, who understands himself personally, because of the state where he's from, that the state of ohio is in need of leadership, real leadership in washington, just as the rest of the country. ando the republican party stan on the floor of the house today, we are about jobs, we're about reducing wasteful washington spending and we're going to stand for common sense. we reserve our time. the speaker pro tempore: the gentleman reserves. the gentlelady from new york. ms. slaughter: i'd like to yield myself one minute before i yield four minutes to mr. cummings. simply to say that one of the things that we're hearing today is that these bills are unneeded. let me just quote a little bit from the "dallas morning news." home prices down 3.6% in december, 40% of home sales in north texas foreclosed and short

sale homes, dalla housing analyst said no doubt the foreclosures continue to have an impact on the market. they're going to receive $135 million through assistance unless all these bills die and i would like to ask unanimous consent to insert the full text of "the dallas morng news" into the record. i mention dallas because that is the district of my colleague. the speaker pro tempore: without objection. ms. slaughter: i wanted to point out that there's pain at home. i now yield four minutes to the gentleman from maryland, mr. cummings. the speaker pro tempore: the gentleman from maryland. mr. cummings: thank you very much. i thank the gentlelady for yielding. and as i said on the floor this morning and listened to my esteemed colleagues on the other side, i must tell you that i am a bit set. when he talks about common sense and balance. these are two words, the common

sense and balance is something think a lk about all the time as the ranking member of the government reform and oversight committee, we talk about common sense. we talk about balance. and part of common sense and balance is trying to make sure our children are educated. part of common sense and balance is making sure that my neighbor who just died ocancer and i would have to go into my pocket over and over again to give him the money to supplement s chemo, common sense and balance. common sense and balance is trying to make sure that people have jobs when i appear at my jobsair in a few weeks it will be just like last year when 9,000 people would show up at 6:00 in the morning and circle around buildings.

common sse and balance so that the students at morgan state university will not have their pell grants reduced by $800 when they're struggling right now, they're working, trying to get a job if they can get one, and working, doing the best that they can and it is their turn, common sense and balance, that we don't cut them off. and so as i listen, you know, i think about all of this and i'm trying to figure out how does the american people make common sense -- get common sense and balance out of what is going on in this house? now, with regard to, i heard my friend talk about regulations, just this morning in a hearing that we had in government reform , we had all of these expects from corporations come and talk

about how they wanted to get rid of, quote, job-killing regulations. every one of them agreed with me that regulations are important because they protect the health, welfare and safety of people. and as i told them this morning, i said to them, and i was very clear, i said, when i was a young student, a high school student, and i would go to bethlehem steel every summer to work, when i blew my knows after being there for an hour -- nose after being there for an hour, when the mucus came out it was black. it was regulation that addressed that and there were men who had been there 40 years who were breathing that every day, eight hours a day. and many of them died early. common sense and regular late, -- and regulate, common sense and balance. common sense and balance and i said to my constituents and i said it to them at a town hall

meeting this week. i said, i wish theongress would address ises like we dd with our family problems. if you've got a family problem and you've goa daughter or a son who wants to go to college, maybe go to an expensive college , you don't say to them, you're not going to go to college, you find a y to, yeah, cut back on some things. you don't cut back on everything, you don't say to that child, you cannot go to school. because it's now their turn. you just don't turn your back on them. you don't cut off people's jobs and their training when they're trying to be retrained, when that father who has lost his job is trying to be retrained. i ask for an additional three minutes. can we get it? . slaughter: may i inquire how much time is left? the speaker pro tempore: you have 11 1/2 minutes. ms. slaughter: absolutely, i yield three more minutes to the gentleman. mr. cummings: and so, you know, common sense and balance. i rise today in strong opposition to this rule which

provides for the consideration of h.r. 836, a bill that seeks to kill emergency home owners, the homeowner loan assistance program. this program was created to provide limited low-cost loans to enable borrowers who are unemployed through no fault of their own, through no fault of their own, or who face debilitating medical costs, and by the way, a lot of people say that they will never face these medical costs, well, all of us are the walng wounded. ll of us will face difficult problems. the question is, will america be the america that it's always been? we do not get our authority by might. we get it by the way we treat each other. and so these folks are going through some difficult times, these are the same people that this loan program is about, these are the same people that showed up time after time, sitting in the front row of

something i call my foreclosure prevention program, with tears runni down their faces. many of them have never missed a mortgage payment, have worked hard every day and have done everything that was required of them. these are our american neighbors, they are the american neighbors that sit in ohio, they're the ones who are in california and new york. those are our neighbors and they are in a time of need and we're talking about a $1 billion program to try to help people as they're struggling, trying to get up after an economy, by the way, where regulation failed them. they find themselves in these difficulties, in many instances, buzz people were not regulating -- because people were not regulatingroperly. and, yes, it upsets me. because i go back to a district every night, 40 miles away from here, where people are sad and there are ars in my district where you probably got 25%

unemployment. so i care about the jobs. they're important to me. i care about people living and staying in their homes. and so if anything was said by the november elections, it was about we need to sit down and get together and work through people's problems like any family would address family problems. and we must be about the business of making sure that we do those things to have a future . i don't want any child in america, i don't care whether he's in your district, mr. speaker, or anybody else's district, i want every child to have an opportunity, i want the same opportunities for your children, mr. speaker, that i want for mine. with that i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from texas. mr. sessions: mr. speaker, at this time i'd like to inform the gentlewoman from new york that i have no additional speakers and if she is done, we could let her go ahead and offer her close and then i will finish it out.

ms. slaughter: i have someone on the way. she's not here. and since you are ready to close -- mr. sessions: i'm sorry, is the gentlewoman wishing to proceed at this time on her close or should i reserve my time? ms. slaughter: i want to wait until she arrives. mr. sessions: i reserve the bance of my time. ms. slaughter: i yield back the balance of my time. mr. sessions: the gentlewoman has now yielded back her time and thank you very much. mr. speaker, theacts of this case state very clearly that this nation is being oveun, it's been overrun by too much taxing, too much borrowing, too much spending. just last month we hit a record deficit, $223 billion. this is unacceptable. the status quo of where we're moving is not acceptable. with the debt looming at over $14 trillion and unemployment as we have heard the stories hovering across the country right at 9% and much higher in many areas of the country, including congressional

districts that are hurt even more and i understand this because those who first lose their job many times are disabled people and i understand disabled people and their plight that they have also and it is sad and it hurts us as members of congress and it hurts the american people. the american people asked congress to rein in the spending, to do something about jobs and that's what we're doing. we're not making excuses, we're getting the job accomplished. eliminating this program will save taxpayers hundreds of millions of dollars. by gaining control of government spending and eliminating wasteful washington government spending, these handouts that the private sector could utilize and gain confidence in the economy and start doing itself, we could begin investing in jobs and a brighter economic future. i apraud my friend from texas --

i applaud my friend from texas, mr. hensarling, in bringing this legislation and to the chair of the rules committee, the young chairman, david dreier, favorite son from california, david comes here and so ably runs our rules committee for us, we thank them for providing an open and transparent process. i encourage a yes vote on the rule and, mr. speaker, i yield back the balance of my time and move the previous question on the resolution. the speaker pro tempore: without objection, the previous qstion is ordered. the question is on adoption of the resolution. those in favor say aye. those opposed, no. in the opinion of the chair, t ayes have it. the ayes have it. the resolution is agreed to and without objection the motion to

. this is two hours.

we will probably have to take a break between 2:00 and 3:00. reconvened for the specific purpose of continuing our testimony. hopefully, we will able to get the first panel. i will call the committee to order. i will read the mission statement. we exist to secure to fundamental principles. americans have a right to know that the money in washington is well spent. americans deserve an efficient and effective government that works for them. our duty on the oversight committee is to protect those rights. our responsibility is to hold

government accountable to taxpayers because taxpayers have a right to know what they get from their government. we will work in partnership with citizen watchdogs to deliver the facts to the american people. this is the mission of the oversight and government reform committee. we are here to discuss whether federal employees are adequately compensated. i will begin with my opening statement. i will defer to ranking member for his. according to the opposite of personnel management, the average salary for federal employees was $74,311 in 2010. the average private-sector owned $50,462. the federal government also pays an average of 36% of the employee based health insurance and pension benefits in addition to the generous paid leave

separate federal employees on average earned $101,628 total compensation in 2010. four times more than the average private-sector worker. the members of the subcommittee recognizing our talents and workforce perform critically essential functions throughout the government on behalf of our nation. we appreciate their service. federal employees should be compensated fairly. current federal salaries are not in line with the marketplace when compared to private a workforce compensation. at a time when our economy is in a recession, the contrast between government and private- sector pay is struggling. the federal government has no incentive or obligation to reduce salaries in order to be competitive. it can simply borrow more money or raise taxes. with federal spending and unemployment at or near record highs, this hearing presents an opportunity for lawmakers to year important testimony from our specialists on how best to

address the growing disparity. compensation of private-sector employees has not kept pace with those of federal employees. federal workers receive generous benefits. vacation, health insurance, pension plans, retirement savings, and disability pay. these benefits greatly exceed those of a normally provided to private sector work force. last november, president obama announced a two-year pay freeze for federal employees. the pay freeze did not impact salary increases driven primarily by the passage of time or bonuses. president obama pay freeze was not really a freeze. according to the euro of labor statistics, the federal government grew by 157,000 people from december of 2008 to two dozen 10. -- 2008 to 2010.

the unemployment rate hovers around 10%. our taxpayers can no longer be asked to foot the bill for these federal employees by watching their own salaries remain flat and their benefits erode. congress has an obligation to consider all reforms that overhaul federal compensation, reduce costs, and better align with the private sector. i think the witnesses for appearing today. i look forward to your testimony. >> thank you, mr. chairman. i want to thank the witnesses for their attendance. good afternoon. the topic of today's hearing regarding federal employee compensation requires us to review the way we are paying are federal employees and revealing

the pay levels and benefits they receive. this topic has generated much debate. we should conduct a robust overside -- oversight. we owe the u.s. taxpayer full transparency in this area. the debate over federal employee benefits predated the 1883 enactment overhauling the patronage system. i'm quite confident that this debate will outlive the service of our committee. federal employees are not immune from our nation's economic and fiscal challenges. i understand the sacrifice called for up with the two-year pay freeze. we need to be careful not to get caught up on the over simplistic comparison between private sector and federal jobs. a recent article pointed out

that when comparing the jobs, the clearest pattern to emerge is in education divide. the most reliable facts in predicting compensation levels is a level of compensation -- the level of education. when comparing private and public sector occupations, the clearest path -- pattern is more pronounced in recent decades. today's workforce is highly educated, with over half working in the nine highest paying professional occupations and the country. it is also a workforce marked by a blue collar workers. the federal employees are a more professional level of the employee. the contract out most of the blue-collar jobs, the lower paying jobs. that is why we did a discrepancy

when comparing federal employees to the general public. in light of the two-year pay phrase, -- pay freeze, today i am introducing my bill for cost transparency into the federal programs. this bill will lower federal employees' out-of-pocket spending and the program is operational costs. i look for a to hearing from our distinguished witnesses assembled here today. -- i look forward to hearing from our distinguished witnesses assembled here today. thank you. >> thank you. members have seven days to submit opening statements for the record. i will now welcome our first panel. john berry, all with mrs. must

be sworn in before their testimony. please rise and raise your right hand. do you swear or affirm that the testimony you're about to get will be the truth, the whole truth, and nothing but the truth? but the record reflect that the witness answered in the affirmative. please limit your opening statement to five minutes. we do have your testimony and we are grateful for that. >> thank you, chairman. it is an honor to be here with you today. i appreciate the opportunity. i believe that the members of the subcommittee and die and all federal employees share the goal of making government more efficient while improving services. i look forward to working together with the to accomplish that. president obama said, i did not think it does any good when public employees are denigrated or vilified or their rights are infringed upon. we need to attract the best and

brightest to public service. our time demands it. our need for great workers could not be more clear. federal employees hold lives in their hands and of receipt large sums of taxpayer dollars. we need talented and innovative people at the department of defense. we need great doctors and nurses are veterans hospitals. we need tough men and women at the department of justice and homeland security to protect us from another terror attack. it is just a fact that in order to get these workers, we must provide pay and benefits on par with other large companies for whom we compete with talent. we cannot and should not be the employer of last resort. despite the complex challenges we face, of federal civilian work force is virtually as small today as it has been throughout the modern era. in 1953, there was one federal

worker for every 78 residents. today, it was one for every 147. the comparisons of average pay between federal and private- sector employees often can ignore the important differences between the skill levels, complexity of work, scope of responsibility, size of organization, location, experience level. even comparisons that purport to compare employees in the same occupations can sometimes be misleading. some claim that federal attorneys make more than private-sector attorneys. in fact, while more than half of our general attorneys and the federal government are in less than $90,000 in their first year of service, the median first- year salaries for comparable attorneys the private sector is $145,000.

federal coax may seem overpaid until you consider that many of them worked in our prison system. they supervised inmates in a very dangerous the environment. the federal government also provides an array of benefits. but while we need to do this to be competitive, these benefits are not free to our employees great employees share in the cost of those benefits. they wonder% in many cases. for help but if it, enrollee's share 30% of the premium cost preyed for dental and vision, they wonder%. for life insurance, they pay 66% for the basic premium. for long-term care, they pay 100%. i would also like to note that congress and president reagan reforms are benefits 25 years ago. this has avoided the struggles

of state and local governments are now going through. those reforms guarantee that our first retirement system is financially sound and fully funded. bottom line, this administration is committed to providing a superior service the american people expect and deserve. managers and employees that are not doing that to be held accountable and ultimately fired. there should be no place for nonperformers to hide. our pay system is not perfect. it is six decades old and could use a re-examination. we are required by law to reduce all the comparisons to one average number. this is not perfect and does not reflect the complexity of the workforce. even so, we must reject this leading -- misleading uses of data that perpetuate the myth that federal employees are

overcompensated correct they are not. our wages and are benefits are fair and our competitive. any reforms be undertake must meet the following principles. our existing system does well. transparency, equal pay for equal work, no political influence, and the ability to recruit and retain the work force we need. this is how it must be if we are to recruit and retain the best workers. falling behind is not acceptable. thank you, mr. chairman. >> thank you. januaryresident's report, issued a 22% difference between federal employee pay and private-sector pay. did that include benefits? >> no. that is focused specifically on the page. >> subsequent to your

testifying, federal pay premium of 14% and combine the benefits of 33% and there are nearly 25% above those in the private sector. federal employees earning full compensation 40% greater comparable to the private sector workers. do agree with their findings? >> absolutely not. >> why not? >> if we will stay with compensation, i am happy to look at them together. it will be easier for keep them separate for a moment. in comparisons are based on -- the federal workforce is now a very skilled white collar workforce. it used to be over a third of our workforce was blue collar.

less than 10% is today. we need to compare the federal government would like to like. they go into literally every locality and they will compare entry-level, midlevel, and senior level career for each position. they will look at an engineer, for example. they will find a job in the private sector that is almost duplicates. the private sector does not use the system. this is very exhaustive and expensive. the work that you will hear from the next panel, they did not have the resources to do that. the statistics does that on an annual basis. we are getting a real comparison of like the job is to like jobs. the average is you will hear about are looking at the total labor force. the primary jobs in the private sector are retail clerks and service workers.

we do not have those in the federal government. those that we do are generally provided on a contract basis. that average pulls down the private sector in number. when you compare engineer to engineer, a lawyer to lawyer, doctor to doctor, what it shows consistently is that federal employees lacked the private sector. >> is that correct? >> no, sir. working in the federal government, our mission is long- term in nature. it should be for any employment. people go to employment for careers. when you look at fiscal year 2010, the rate was one place 5%. the layoff rate was 0.3% the you have any opinion as how that would compared to the private sector? >> i efforts of misinformation

from some folks talking about the federal government does not have a retention problem. let me give you doctors and nurses. in to thousand five, we hired 2000. as of today, we have lost 2300. i have a retention problem. talking tot we're employees, one of the biggest concerns is the fact they are underpaid. >> speaking as the whole federal work force, we're only looking at one place 5% rate. -- 1.5 tons -- 1.5% rate. you talked about a highly skilled occupations. are there any circumstances were federal employees are paid above the market? >> absolutely.

i did not mean to represent when i said the 22% pay gap that does not apply to each and every job that is a gross average. some employees are paid more. some are paid less. some are paid the same period to get that number, a clear majority are paid less. there are some that are paid more. >> how many days of paid leave are federal employees entitled to? >> it varies based on years of service. i will provide that to you. >> thank you. my time is up. >> thank you, mr. chairman. welcome, director barry.

this is to dozen aides -- 2008 to 2010. you would think that employment went up. i went back and i got the numbers. i was surprised by that number. i went back and calculated the number of separations. the number of people left the federal government. we had to undergo 6000 leave in 2010 -- we had to doesn't -- with a 2600 leading to a dozen 10. -- 2010. while they are saying that they -- there has also been a reduction of 616,000 employees

that left. that speaks to the argument of job security. these were the deaths, firings, retirements, all combined. i think it provides a wider picture. much has been said of the lack of performance management, mainly its inability to appropriately abort performance. i think it was because some of those concerns -- weeks. -- we experimented with an alternate pay system. we spent hundreds of millions of dollars employing the new system. oddly enough, we had 0.8% of people who usually are rejected for increases under the old

system. under this new system, 0.2% were rejected. with the new system, we had less people did disciplines or rejected for their increases. it seems like the managers were doing the same thing under the new system as they did under the old system. i am curious if you think that is a viable alternative. >> i think you hit on two points. first, the congress repealed and the defense department has been moving back into the system. if you think that their pay for performance system was going to

save the taxpayer dollars, what we found is that 20% of the workforce is on retained pay. they are making more than they would have made had a dent in the schedule. they will stay frozen until the schedule catches up. that is a big number. the second point is that it goes to something i have learned and the two years on the job here and working on this, i spent a lot of time looking at a performance. i have concluded that it is more important to focus on performance side of the equation first. get that right. good performance is based on the three key things. i would not sit here and tell you that we do it well. organizational mission and goals, down to the individual

employees and performance. managers and employees regularly having conversations. are we on track or off-track? when not a plan to get back on track. if they're not back on, -- that is a good performance system. we can do that. what i am going to do and what we just did yesterday, we have created a working group made up and shared by two career senior executives. it will not have political bias. they will report in on what we can do to tighten and strengthen our performance system. if we get that right, then we can have a discussion about pay. we can avoid repeating the same mistakes rubbermaid. -- that were made. >> thank you. we have recognized the distinguished gentleman from utah.

>> thank you for being here. my understanding is since the time barack obama took office there is a net increase the federal employees is 157,000 additional federal workers. >> there is an increase. about 75% of those of been comprised in hospitals, home and security, justice department. >> the net increase is roughly 157,000 additional workers. you plan to hire an additional one under 25,000 -- 125,000. what that number is has been overtaken by the president's budget. it shows that number stay flat for three years. >> he has increase the compensation level in his budget by 2.5%.

roughly, $6 billion. by the additional $6 billion? -- why the additional addition up -- why the additional $6 billion? >> i would need to understand better exactly what you are referencing. >> between to those 11 and to a dozen 12, based on the executive branch. -- 2011 and 2012 based on the executive branch. the reality on a pay freeze is that the nets did not say that the american taxpayers' money. that number is actually growing. >> the pay freeze is a cost-of- living adjustment that is a

definite savings. it saves over $28 billion. >> it will cost the taxpayers more. taxpayers will pay more for federal employees as whole this year as opposed to the year before. >> have the president not frozen pay -- >> what is concerning to many of us is that the president -- he has frozen and will pay adjustment for two years. it gives the impression that we will not spend more money on personnel. you are hiring additional people. they are somewhat offended because their pay is frozen. >> in the president's pay freeze, he directed to report back to him on a program that will address and deal with bonuses and the incentive

programs. the office of management and budget will be doing that in short order. you will see that the numbers will change. >> based on a letter that you gave to this committee on february 16, 779,000 people actually got awards. over 63% of the federal workers actually got awards. why so many people? at a time when people are losing their jobs? >> 2.1 million size work force, the average number is below $1,000. these are not the wall street bonuses that people are used to when they think of a bonus. these are recognizing outstanding performance. >> that is 63% of federal workers said got a bonus.

there are a lot of people out there losing their jobs. they do not understand the president says we will have a pay freeze, and then you are handing out bonuses. it does not make sense. how much money are you going to give away in bonuses? >> it works out to be between 1% and 2% of payroll. >> what is the dollar amount? >> i will have to give you the exact number. >> my understanding is that more than three-quarters of the 1.4 million a general schedule employees will get at least one pay raise between 2011 and 2012. >> it is a legitimate concern to be addressed. one of the things that we can take back to this working group is -- >> is that a fair number? do you dispute that number? >> i would presume -- i trust

you. >> the time has expired. we will take a recess and reconvene at 5 minutes after our last motion in about a half an hour. thank you. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> i would like to recognize miss norton for five minutes. >> thank you very much, mr. chairman . this hearing provides the

opportunity if we will use it to clarify a number of matters. i want to thank you. adjusting your first sentence. the very high quality thnology knowledge level of the workforce. i will guarantee you tt there was almost no information when you hear what federal employees means that you are talking about engineers, scientist a nuclear plant inspectors. less than a third of private- sector workers fall into this category. the apples to bananas comparisons have grown tiresome. what was interesting to me it

was the extraordinary reduction in the federal workforce. since the end of world war ii. one federal worker for every 78 residents in 1953. one for every 147. how much of this represents our productivity of federal workers? how do you account for that kind of production -- reduction per- capita? >> productivity is a big piece of that. one of the reasons the workforce has got more sophisticated is the they had to do more with less. did you have people who could handle the technology. -- they needed to have people in

a good handle the technology. you need highly skilled people. these are billions and billions of dollars they are accounting for. take medicare, for example. 20% of the federal budget is medicare. it is administered by .002 of the federal workforce. the efficiency rate, being able to deliver those payments accurately, it is a combination of highly skilled workforce and technology and productivity improvement. one of ththings that both democratic and republican presidents have done over the past decade is to do more and more contracting out. the obama administration seems to be going in the opposite

direction. expecting to save $40 billion annually. by reducing the number of contract workers do they save us or cost us? >> it is a little on both sides of the ledger. i do not want to fall into the same track of gross average answer. some cost us more overtime. some cost us and have tree savings. >> if there is over time, you can keep track of it. do you keep track of the productivity -- what to do about the contract and workers? >> we do not track that.

i, unfortunately, do not have that. >> it is very difficult for us to understand a federal work force that has more contract workers than federal employees en the focus is on federal employees and most of the workers, including workers to work at home, are contacting. why would a contract it employee work angside a federal employee? >> i can give you a good example in my agency. what are essential government functions? opm does 90% of the background investigation for security clearances. we do that with about 2000 government workers -- >> can i ask you one question? collective bargaining and the federal sector, our workers do

not bargain for paid dances. is that so? >> they cannot. >> is there any reason why anybody would want to pull back on collective bargaining? >> the head ministrations are strong supporters of the partrship approach. -- the administration is a strong supporter of the partnership approach. we are working in that direction. >> thank you very much. >> we will recognize the distinguished chairman of the oversight committee. let me run through a couple of items just the somebody who came out that the electronics industry and allied with the automobile industry, we have people making eight times more cars. do we place as much over a

period of 60 plus years -- i am not sure it should be the stdard for the federal work force. if the federal workforce fails to give us efficiencies -- we are at a time when we are trying to produce real savings. etz talk to you about step increases. if you cannot accept step increases today, can you work with us to look for a way to have stepped increases and even if there is a catch up provision later, but in this year's budgeting, eight freeze -- a freeze and not just for those that do not have step increases, but for everybody.

we are only talking about step increases, not merit increases we have talk about. >> at this point in time, the answer would be no. i am happy to take that back and discuss that to see if there would be any opening there. i believe you are talking about "within grade" increases. >> it would occur in automatic -- you are simply still vertical. as long as you are on the payroll, you get the increases. it continues up. >> my concern with that, mr. chairman, would be we were talking about the retention rate. >> i will cut you short for a moment. your view is, we freeze for real, we have a retention

problem. >> within grades allowed a natural progression. >> my time is short. the president announced a freeze. there is no freeze because people are getting increases automatically. they will make more money -- they will make the same ney this year they made last year and a year before because we have a freeze is going on. the president announced a pay raise. there will be pay raises due this process. you support that from the standpoint of pretension. a simple answer like that is fine. i am not asking you to be on our side of that particular issue. and get to a couple more that are important. you mentioned medicare. you do medicare with so few peop -- medicare as a 10% for

all right. it is the worst in health care. this is the mostraud-ridden program. we are not nessarily talking about bad doctors. we are talking about organizations pretending to be doctors and thsystem does not catch them. on what to ask a specific question. in your seat a couple of days ago, we had the gao report be presented to us. it shows $100 million in savings by consolidating some programs. many of those are in the purview of the administration. there were not created by an act of congress. had you looked at whether or not federal work force can be more efficient and take advantage of some of that $100 billion simply by some consolidation within the recommendations of that report?

>> absolutely. i am aware of the report. i have just 81-page summary of the highest risk items -- a one- page summary of the highest risk items. three-quarters of those items have a human capital segment. it will be incumbent on us whether we have good people on the job to handle these issues. recruiting and retaining an outstanding work force -- >> you are going back to the same answer. i appreciate that. the adi and heritage reports did not include an adjustment for educational experience. would you look at them again and give us an answer on why you think there was fraud in the process. this means going back to the g l

and doing one more sty to try and find out -- gao and doing one more study to try and find out if they are correct in their assessments. if they are correct, we were paying some people quite a bit more than would be necessary to recruit and retain. if we could get you comments in two weeks, that will allow us to make a decision going forward. >> yes, mr. chairman. i would be happy to. >> we recognize the distinguished gentleman from illinois. >> thank you, mr. chairman. it is good to see you again. thank you for being here. let me first of all commend you for the movement i have seen in promotions, especially as it relates to women and other members of minority groups. i appreciate that movement i ha observed. let me ask you, exactly what was

the president doing when he initiated a freeze? what was the accomplishing? >> it is an important point you have hit on. it goes to the ter of the back- and-forth we have had today. the appointment cost index reflects the cost of labor increase that is determined by what is happening in the private sector. what we do is we get that data. the law provides that federal employees would get that%. that is not built into it -- get that percent. that is not built into the budget. it affects every employee of the federal government. all 2.4 million get that adjustment. not every employee is that oan annual basis. those are experienced-based. some people get them every year.

some people get them every three years. some people do not get any for a two-year period. those numbers are built into the agency's baseline. there are all these people leaving and coming. as senior people leave, yoghurt folks come in at lower pay. -- younger folks come in at lower pay. the reason i would have argument with the numbers that are being thrown around is that does or within the overall budget. the president has directed those downwards. the president has a five-year domestic spending freeze that will take our budget to what it was when eisenhower was in the white house. that is a $400 billion in savings. that is the way to approach reducing the federal government, not by across the board cuts, but by dealing with the budget

numbers that are real. that is what the taxpayers want. that is what the president is trying to deliver. >> at the end of the day you have experience some cost savings and to reduce the budget. let me go to another area. many people i encountered take the position that they believe somehow or another the public work force is not as efficient, not as productive, and ultimately not worth as much as private sector employees. almost no matte what infoation you give to them, they still maintain those feelings. had you ever encountered any studies, any reports, any information that would validate that kind of thinking? >> there are not a, sir.

i can give you two things i think address your point. the first is my own experience. i have been here since 1985. i have sat in the chair where many of your staff is sitting today. we would regularly hear members of the reagan and bush administration and their answer under testimony was, "what do you think of federal employees?" to a person, thehave said they were impressed with what they have encountered and that many of them are listed as the biggest surprise they encountered in washington. i was with clay johnson last friday night. he said the exact samthing. i think anecdotally people who are around federal employees, who see what they do, come away very impressed. resurvey our employees every year with questions.

the most recent employee survey showed that 97% of respondents answered positively to the question "when needed, i am willing to put in the extra effort to do what needs to be done to get the job done." our federal employees are committed. they understand the criticality of theirission. they are protecting our interests. i am here to tell you, i have never seen a study that would question the work ethic. >> thank you very much. process, mr. chairman. >> thank you, mr. chairman. mr. cummings, thank you. >> one of my concerns is that so

often federal employees are getting a bad rap. we all work with federal employees' everyday up here. we see what they get through. on this side of the aisle, every single one of our employees have to take a 5% cut. this was done in a time when milk is going up, gas is going up, rent is going up. a lot of times i think we forget that public employees trade out very important functions. we take so much for granted. one of the reasons we take so

much for granted is because they are expendable. you said something earlier and i want you to elaborate. i look at the people who work for me -- work with me, rather. i look at their education levels and i know without a doubt that they could be making a whole lot more money than working on this hill. they could be working a lot less hours. some of them working until 2:00 and it 3:00 in the morning and they do not get a whole lot of money. i know that they get certain benefits. i want you to go back. i am tired of these public employees being beaten up on.

it pains me tremendously. i just want you to go back -- you said something about education. by the way, when you talk about education, a lot of them are struggling try to pay back loans because they wanted to be the best they could be. they wanted to take the advantage of their opportunities. after they got an education, they did not go to wall street. they did not go looking for the big bonuses. they came because they wanted to serve the public and they have sweated blood, sweat, and it tears simply trying to lift us up, to make this congress better, to make sure our airports or safe, even cleaning airport bathrooms, cleaning these places -- cafeterias.

talk about education think again. i think we lose sight of that. with everything else, you get elevated because you get an education. a lot of these folks have been educated -- have been education and they stayed the same. the predent says they will be level-funded. tell me about that. >> the president is, as are all americans, grateful for the sacrifice federal employees are doing. there are families that have to deal with the inflationary cts and pressures -- the cost of milk, the cost of gas -- the they still have to commu and they still have to deal with those costs. the president is clearly aware of their sacrifices and is grateful for it. there -- they were the fst onessked to step up to the plate and help the country.

>> let me interject something. when i had to ask the employees when i took over this committee -- i had to ask every single employee if they would te a 5% cut. listen to me, director. not one of them objected. i ask them why. they said, "because we want to serve the public." we have to be very careful in these conversations that we have. we need to encourage the best and brightest to come to government. we do not want to bcaught up in a culture of mediocrity. we want the best. i cut you off. what were you saying? >> it goes to what you were saying about our been at the comparison. you hear that our benefits are not in line with the private sector. i would argue that they are in line when you account for we do not have proper sharing or stock tions in the federal

government. most of my work force is compatible with the large companies in the private sector. it is not fair to compare federal employees with the labor force. i do not have short order cooks. i do not have waitresses. god bless all of those. they should be paid what they should be paid. to save federal employees should be paid based on that is not appropriate. you have to appear like to light -- apples to apples. the ports in 500 companies are a much better comparison in terms of who you -- the fortune 500 companies are in much better comparison in terms of who is working for us. half of federal workers work in the ninth highestaying occupations. by comparison, a -- by comparison, only a third of the labor force works in those

occupations. in contrast to the private sector workers inhe four lowest paid operations, only one in 13 of federal employees are in that category. when you look at this, -- that comparison is looking at the total civilian labor force, not as like to like. when you come into education or comparing these things, we need to reflect that the federal work force is a highly skilled, highly challenged work force. >> that is my time. thank you, mr. chairman. >> we will yield to the chairman from virginia. >> if i could just pick up on where mr. cummings was leading off -- what you are saying is the skill set mix of the public sector is quite different than the privat sector skill-set of

the work force. >> absolutely. that is my core point. wheat are running 8 -- we are running a company of 2 million employees that is dealing with challenges that rival any thing -- it really does not have a comparison in the private sector. it is bigger than the fortune 500. to compare it to the totalabel -- labor force, i can see how it could be something to do politically, but it unfairly compares wages. it is not an apple to apple comparison. >> with respect to the size of the federal work force, is the current federal work force significantly larger than it was when president george h. w. bush was in the white house in 1991? >> i can leave this or did this

to you for the record. i did not make up these numbers. it shows you the civilian labor force from 1950 until the present. it is this red line. it is pretty flat. federal expenditures or the blue line -- federal outlays. outlays have gone up over that time period, but the work force has remained largely stable. these are gao numbers. >> absolute numbers. >> yes, sir. >> i am re the ranking member would not want this puthere -- i hope my republican friends remember this when we are back in the majority. [laughter] there will be all kinds of signs. you may not like them. why don't we be assembled to one another and respect the fact that the ranking member sits

there. that would be a different issue. where were we? [laughter] despite the hysteri, the work force has not come up much but the missions have. >> absolutely. the majority of th increase is in what would either be -- >> all ask you not to point to a sign where a congress member does not exist. >> we have obviously had to stand up a significant counter- terrorism force in the country. both parties agreed that is something we need to do. we need to prote our border as well. both parties agree to that. we need to protect our veterans when they come home with serious injuries. we need more doctors and nurses to care for them.

>> let me understand -- for example, president george h. w. bush at roughly the work force we had. we created a whole new agency of federal government, homeland security. is that correct? >> yes, sir. >> we beefed up fema after its utter collapse in new orleans. is that correct? >> i would have to check my budget numbers to answer that one. >> i think the answer is yes. of course, since president george h. w. bush was in the whe hse, we are fighting two wars in iraq and afghanistan. is that correct? >> yes, sir. >> there are costs related to that including care of veterans when they come home. >> the the there is an increase

in iraq -- as the military mission is going down, the state deployment -- state department employees are going up. there are people going into a dangerous area, serving the country. that is a civilian increase. we have to recognize that. >> i will end on that. there are civilian federal employeesut in their lives at risk next two uniformed military in iraq and afghanistan. is that correct? >> absolutely. i look forward to be able to end up with mr. lynch one of his visits to iraq or afghastan. we can honor the service of both our military and civilian work force that put their lives in great danger to serve our country. >> thank you. >> thank you, mr. connolly. that is the last of our questions. we will recess for now.

thank you for being here. weill prepare for the next panel. >> thank you, sir. it is an honor. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> we have a senior policy expert from the heritage foundation. we also have the resident scholar at the american enterprise institute. we have the president for the partnership of public service and the national president for the national treasury employees union. if you all would not mind, please stand up to be sworn in. please raise your right hand. do you solemnly swear or affirm the testimony you're about to give this committee will be the truth, the old trees, and nothing but the truth? thank you. let the record show all witnesses have answered in the affirmative. i will recognize each of you for by minutes to summarize your testimony. the transcript has been submitted for the record. >> chairman ross, ranking

member, and members of the subcommittee, thank you for inviting me to testify. the views i expressed in this testimony are my own and should not be construed as recommending a official position. as a consequence is up this filing, the average federal employee bursting typically more than they would make in the private sector. there are things the congress should be made aware of. it does a poor job of approximating market fare -- market paid. the jobs similar level of work received the same pay. an engineer, and i t specialist, and a budget analyst all receive the same pay. the law requires the president's agent to determine what level of work a private- sector job entails.

the federal pay is set by averaging pay. this superimposes the general and now. private sector employees do not base plate on anything remotely resembling this schedule. market forces determine private pay. employees in different occupations perform similar levels of work and earn very different salaries. federal play often looks nothing like market rates in both directions. some federal employees have wildly inflated salaries. some are 50% above what they would earn in the private sector. others to not receive market rate. highly skilled workers such as scientists and lawyers do not receive premium wages in the government. the second feature of the federal pay system congress should understand is that on

average -- my research shows that after you account for education, experience, and occupation -- something where you can make an apples to apples comparison -- the average federal employee makes 22% more an hour then in the private sector. including benefits, -- the average federal employee earns more than they would then if they were in the private sector. it will cost taxpayers $50 billion this year. many economists have come to this view. alan krueger served as the chief economist at the treasury department in the obama administration. he found that "the federal government consistently pays a higher wages than the private sector for federal employees."

the research consistently shows that they are paid more. it is important to emphasize that this average federal premium as only part of the variation between federal and market paid. it is simultaneously true that many federal employees are not overpaid and that the federal government pays private sector employees more on average. notpresident's report does agree with this. no administration has ever found the results credible or acted on them. it frequently expresses concerns with the methodology of the law requires it to use. this is for good reason. that federal employees were underpaid, the federal government would have retention problems. federal employees quit their jobs just one-third as often as private sector workers. they know they are getting a better deal pandit federal government than they can get on the private sector. the third